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Financial Feasibility Study for the City of Chula Vista

Chula Vista Bayfront

June 30, 2021

By Matt Pelletier and Wesley Smith, Analysts

In 2020, RSG conducted a financial feasibility and local tax impact analysis of a proposed 535-acre development along the City of Chula Vista’s bayfront including parks and open spaces, restaurant and retail space, mixed use commercial space, and over 2,800 hotel rooms. The three projects analyzed in RSG’s study consisted of one very large and nationally renowned hotel and resort development called the Gaylord Marriott, the recently renovated Rambler Motel, and the construction of a new RV park called Costa Vista. RSG was tasked with determining occupancies rates, the average daily room rate (“ADR”), COVID-19 pandemic related impacts, and all potential tax revenues generated from the projects over a 40-year period. Unique to this analysis was the City’s creation of a special tax financing district that levied an extra tax on hospitality industry properties in the Chula Vista bayfront area.

The Gaylord Marriot Hotel presented a unique set of challenges for projecting tax revenues. The Gaylord brand is a world-class hotel brand owned by Marriott that is usually coupled with a convention center. Hotels under this brand are some of the largest in the nation with over 1,500 rooms. There are also no Gaylord hotels on the west coast and only three others in existence.

Additionally, the Costa Vista RV Park also presented unique challenges because the park was a higher end RV resort with several amenities and there was a limited supply of readily available data on the operations of similar RV parks. RSG gathered data directly from management of similar RV parks to help inform the inputs that were used in the revenue projections.

RSG utilized the data gathered from various sources to review and validate the proformas for the Gaylord Marriot Hotel and Costa Vista that were prepared by CBRE and Sun Communities LLC for the respective project. RSG developed a financial model to project the transient occupancy tax, special tax, sales tax, property tax, and ground lease revenue that would be generated from the projects totaling $599.7 million over a 40-year period. The analysis performed by RSG was able to help inform the City of the financial feasibility of the bayfront project that could have great benefits to the economic future of the City of Chula Vista.